Reported from the source

Quick summary: Defense Secretary Pete Hegseth on Friday downplayed concerns regarding the ongoing closure of the Strait of Hormuz due to the Iran war, despite a significant spike in oil prices and market uncertainty. Hegseth asserted that the U.S. has a plan to address the situation, which he attributed to Iran’s “sheer desperation,” but offered no specific details or timeline. His reassurances came amidst conflicting statements from other U.S. officials and significant skepticism from financial analysts regarding the feasibility and timing of reopening the critical shipping lane.

Defense Secretary Pete Hegseth on Friday dismissed worries about the continued closure of the Strait of Hormuz, a critical oil shipping chokepoint, stating that the U.S. has been “dealing with it, and don’t need to worry about it.” The closure, attributed to the Iran war, has seen West Texas Intermediate crude oil prices surge from approximately $67 per barrel before the war on February 28 to around $93 per barrel on Friday morning. Hegseth criticized media reports suggesting the U.S. military lacked a plan to reopen the strait, affirming that planning for such a scenario has been in place for decades. He characterized Iran’s actions as “exercising sheer desperation” and stated, “The only thing prohibiting transit in the straits right now is Iran shooting at shipping.” However, neither Hegseth nor Joint Chiefs of Staff Chairman Dan Caine provided specific details or a timeline for how the U.S. intends to open the strait to oil tankers and other vessels, with Hegseth only noting a desire to proceed “sequentially.” Conflicting messages emerged from other U.S. officials, with Energy Secretary Chris Wright telling CNBC on Thursday morning that the U.S. Navy was not ready to escort oil tankers. Hours later, Treasury Secretary Scott Bessent informed Sky News that the U.S. Navy, potentially with an international coalition, would begin escorting ships “as soon as militarily possible.” Hegseth also made claims regarding Iran’s military capabilities, predicting the destruction of all Iranian defense companies “soon and very soon” and stating that companies building ballistic missile components had been “functionally defeated.” He further speculated that Iran’s “new so-called, not-so-supreme leader,” Mojtaba Khamenei, was “wounded and likely disfigured.” Despite the Defense Secretary’s assurances, RBC Capital Markets expressed “significant skepticism that a robust US Navy tanker escort service will be operational soon,” citing capacity constraints and Iran’s enhanced military capabilities posing a greater challenge than during the 1980s Tanker Wars. The firm also noted a lack of enthusiasm for a U.S.-promoted $20 billion insurance program, which only covers 22 miles of sea lanes within the strait and lacks casualty or environmental coverage. RBC’s Helima Croft highlighted that Washington-based security analysts appear to be working with “longer-duration timelines than market participants residing outside the Beltway.”

Source: www.cnbc.com